Obama warns GOP leaders: 'Don't call my bluff'

By David Espo And Andrew Taylor
Associated Press

Published: Sunday, Aug. 2 2015 4:51 p.m. MDT

WASHINGTON — President Barack Obama bluntly told Republican congressional leaders Wednesday they must compromise quickly if the government is to avoid an unprecedented default, adding, "Don't call my bluff" by passing a short-term debt limit increase he has threatened to veto.

The presidential warning, directed at House Majority Leader Eric Cantor, R-Va., marked an acrimonious end to a two-hour negotiating session at the White House that produced no evident progress toward a compromise.

Another round of talks is set for Thursday.

With a threatened default less than three weeks away, Moody's Investors Service announced it was reviewing the U.S. bond rating for a possible downgrade, and the Treasury said the annual deficit was on a pace to exceed $1 trillion for the third year in a row.

With the negotiations at a seeming standstill, Republicans drew a warning of a different sort, from an unlikely source — the party's Senate leader, Sen. Mitch McConnell of Kentucky.

In an interview with radio talk-show host Laura Ingraham, McConnell warned fellow conservatives that failure to raise the debt limit would probably ensure Obama's re-election in 2012.

Republicans, many of them elected with the support of tea party activists in 2010, are demanding deep spending cuts as the price for allowing a debt limit increase to pass. But negotiations have bogged down over Obama's demand for tax increases that GOP lawmakers say they won't accept.

McConnell predicted that if Congress fails to act, Obama will argue "that Republicans are making the economy worse and try to convince the public, maybe with some merit, if people start not getting their Social Security checks and military families start getting letters saying their service people overseas don't get paid."

"You know, it's an argument he has a good chance of winning, and all of a sudden we (Republicans) have co-ownership of a bad economy," McConnell said. "That is a very bad positioning going into an election."

McConnell said his first choice was to reach a good compromise with Obama.

Short of that, "my second obligation is to my party ... to prevent them from being sucked into a horrible position politically that would allow the president probably to get re-elected because we didn't handle this difficult situation correctly."

With bipartisan talks scheduled to resume on Thursday, two Democratic officials quoted Obama as telling Republicans, "Enough is enough. We have to be willing to compromise. It shouldn't be about positioning and politics and I'll see you all tomorrow."

Talking with reporters at the Capitol after he left the White House, Cantor said the president had backed away from spending cuts agreed to earlier because of pressure from Democrats in Congress. He said the two sides were far from agreement on a $2.4 trillion package of deficit cuts that would allow the Treasury to borrow through the next election.

As a result, the Virginian said he had reversed his own position, and was now willing to ask the House to approve a smaller increase, with a second installment before the 2012 election.

"He got very agitated seemingly and said he had sat here long enough and that no other president, Ronald Reagan wouldn't sit here like this," Cantor said of the president.

Cantor quoted Obama as saying the talks had reached the point that something's got to give," and demanded Republicans either jettison their demand for deficit cuts at least equal to the size of the debt limit or drop their opposition to tax increases.

"And he said to me, 'Eric, don't call my bluff.' He said, 'I'm going to the American people with this.'"

Democratic officials said that in fact, Cantor had twice earlier in the meeting raised the possibility of a short-term bill, and that he interrupted the president mid-sentence to do so a third time.

At the Capitol, rank-and-file lawmakers advanced their own fallback measures in case the bipartisan compromise talks fail.

One version, authored by Sen. Bill Nelson, D-Fla., was designed to make sure Social Security benefits are paid on time. Another, unveiled by a trio of House conservatives, would give priority to paychecks for members of the armed forces.

Without an increase in government borrowing authority by Aug. 2, Treasury Secretary Tim Geithner has warned, there could be a default posing a catastrophic risk to the economy, still recovering from the worst recession in decades.

At least in part, McConnell's comments were a rebuttal to conservatives who criticized his proposal on Tuesday to let Obama raise the debt limit without a vote of Congress.

Presidential hopeful Newt Gingrich called that idea an "an irresponsible surrender to big government, big deficits and continued overspending," and Ingraham said she had received emails from conservative listeners likening McConnell to Pontius Pilate.

The Republican lawmaker brushed aside the biblical reference. But without mentioning Gingrich by name, he referred to two government shutdowns of 1995 that the one-time House speaker engineered in hopes of winning deep spending cuts from a Democratic president.

The tactic backfired politically on Gingrich and the Republicans, and benefited President Bill Clinton.

Some Democrats couldn't resist the temptation to jab at Republicans.

"You have the Republicans who walked out of the Biden talks. You have the speaker of the House who's close to entering into a framework agreement with the president of the United State walk out because other Republicans in the House undercut him," said Rep. Chris Van Hollen, D-Md., a participant in the talks led by Vice President Joe Biden.

"And now you have Republicans trashing a proposal put forward by the Republican leader in the Senate."

Nelson's proposal was designed to ensure that Social Security recipients receive their checks in the event of a default, mandating that the program's obligations no longer count against the overall debt limit.

He acted one day after Obama cautioned that he could not guarantee the checks would go out if there was a default.

On the other side of the Capitol, Republican Reps. Steve King of Iowa, Louie Gohmert of Texas and Michele Bachmann of Minnesota, a presidential candidate, said if the debt ceiling is reached, the Treasury should fund pay any allowances for members of the armed forces first and obligations on the public debt second, ahead of all other expenses.

Congressional Republicans have had a relatively muted response to McConnell's debt limit proposal. Privately, though, conservative lawmakers have been critical, accusing him of giving up the leverage the GOP has to force Obama into making deep spending cuts as the price for an increase in the debt limit.